EXHIBIT 10.2
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INTELLECTUAL PROPERTY AGREEMENT
BY AND BETWEEN
THREE-FIVE SYSTEMS, INC.
AND
BRILLIAN CORPORATION
EFFECTIVE AS OF
SEPTEMBER 1, 2003
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TABLE OF CONTENTS
PAGE
Section 1 Definitions....................................................................................... 1
Section 2 Grants Under Transferred Intellectual Property and Trademarks..................................... 2
Section 3 Quality Control, Ownership and Benefit of Trademarks.............................................. 2
Section 4 Preservation of Rights in Patents................................................................. 3
Section 5 Preservation of Rights in Trademarks.............................................................. 3
Section 6 Grant of License by TFS........................................................................... 4
Section 7 Miscellaneous..................................................................................... 4
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INTELLECTUAL PROPERTY AGREEMENT
This Intellectual Property Agreement (the "IP Agreement") is
effective as of September 1, 2003 (the "Effective Date"), by and between
THREE-FIVE SYSTEMS, INC, a Delaware corporation having a place of business at
0000 Xxxxx Xxxxxx Xxxxx, Xxxxx, Xxxxxxx ("TFS") and BRILLIAN CORPORATION, a
Delaware corporation having a place of business at 0000 Xxxxx Xxxxxx Xxxxx,
Xxxxx, Xxxxxxx ("Brillian").
RECITALS
WHEREAS, TFS and Brillian have entered into a Master
Separation and Distribution Agreement (the "Separation Agreement") effective as
of September 1, 2003 (the "Effective Date");
WHEREAS, pursuant to the Separation Agreement, TFS has agreed
to convey, assign, transfer, contribute, and set over, or cause to be conveyed,
assigned, transferred, contributed, and set over, to Brillian, certain
intellectual property of TFS;
WHEREAS, pursuant to the Separation Agreement, Brillian has
agreed to accept and receive all right, title, and interest in and to certain
intellectual property of TFS; and
WHEREAS, TFS desires to obtain a license in the intellectual
property conveyed, transferred, contributed, and set over, to Brillian by TFS;
and
WHEREAS, TFS desires to grant a license to Brillian for
certain intellectual property owned by TFS.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual covenants and
promises contained in the Separation Agreement and this IP Agreement, TFS and
Brillian hereby agree as follows:
SECTION 1
DEFINITIONS
1.1 "AFFILIATE" shall mean any TFS subsidiary, division,
related party, or an entity at least fifty percent (50%) of which is owned or
controlled by TFS.
1.2 "BANKRUPTCY EVENT" shall mean any of the following
events or circumstances with respect to Brillian: (i) ceases conducting business
in the normal course; (ii) becomes insolvent or becomes unable to meet
obligations as the obligations become due; (iii) makes a general assignment for
the benefit of creditors; (iv) petitions, applies for, or suffers or permits
with or without consent, the appointment of a custodian, receiver, trustee in
bankruptcy or similar officer for all or any substantial part of its business or
assets; or (v) avails itself or becomes subject to any proceeding under the U.S.
Bankruptcy Code or any similar state, federal, or foreign statute relating to
bankruptcy, insolvency, reorganization, receivership, arrangement, adjustment of
debts, dissolution, or liquidation, which proceeding is not dismissed within
sixty (60) days of commencement thereof.
1.3 "INTELLECTUAL PROPERTY ASSIGNMENT AGREEMENT" shall
mean the Intellectual Property Assignment Agreement effective as of the
Effective Date, pursuant to which TFS expressly conveys its right, title and
interest in Patents, Inventions and Trademarks to Brillian, which is attached
hereto as Exhibit A.
1.4 "INVENTIONS" shall mean all inventions described in
the TFS invention disclosures set forth in the Intellectual Property Assignment
Agreement and all improvements to the inventions described in the TFS invention
disclosures set forth in the Intellectual Property Assignment Agreement.
1.5 "LICENSED PRODUCTS" shall mean all products excluding
a Microdisplay or systems incorporating a Microdisplay.
1.6 "MICRODISPLAY" shall mean a display incorporating
pixels having a pixel pitch that is less than fifty microns (50(micro)m).
1.7 "PATENTS" shall mean all United States (U.S.)
patents, foreign patents, U.S. patent applications, foreign patent applications,
and Patent Cooperation Treaty (PCT) applications set forth in the Intellectual
Property Assignment Agreement and any and all provisionals, continued
prosecution applications, divisionals, continuations, continuations-in-parts,
substitutions, extensions, renewals, reexaminations, utility models and
certificates of invention, reissues or like documents of such patents and patent
applications.
1.8 "TRANSFERRED INTELLECTUAL PROPERTY" shall have the
meaning ascribed to it in the Separation Agreement.
1.9 "TRADEMARKS" shall mean the trademarks described in
Section 1.1(f) of the Separation Agreement, including the trademarks set forth
in Schedule 1.1(f) of the Separation Agreement and all trademarks and service
marks ("Trademarks"), U.S. Trademark registrations, U.S. Trademark applications,
foreign Trademark registrations, foreign Trademark applications and companion
and related applications set forth in the Intellectual Property Assignment
Agreement, together with the goodwill symbolized by and associated therewith.
SECTION 2
GRANTS UNDER TRANSFERRED INTELLECTUAL PROPERTY AND TRADEMARKS
2.1 Brillian hereby grants to TFS and its Affiliates, a
perpetual, non-exclusive, worldwide, non-terminable, fully paid, royalty-free,
irrevocable, right and license, without the right to sublicense, under the
Transferred Intellectual Property, to make, have made, use, lease, sell, offer
to sell, import, have imported, modify, market, distribute, or otherwise dispose
of Licensed Products.
2.2 Brillian hereby grants to TFS and its Affiliates, a
perpetual, non-exclusive, worldwide, non-terminable, fully paid, royalty-free,
irrevocable, right and license, without the right to sublicense, to use the
Trademarks in connection with the production, distribution, sale and
advertisement of Licensed Products.
SECTION 3
QUALITY CONTROL, OWNERSHIP AND BENEFIT OF TRADEMARKS
3.1 Brillian reserves the right to control the nature and
quality of: (1) all services and goods rendered by TFS in connection with the
Trademarks; (2) all goods produced, distributed, or sold by TFS under the
Trademarks; and (3) all related advertising, promotional, and other related uses
of the Trademarks by TFS. With respect to the services and goods rendered by TFS
in connection with the Trademarks, TFS agrees to maintain, at a minimum, the
quality of standards that it uses on the Effective Date for its own products and
such other quality standards as Brillian shall reasonably require.
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3.2 TFS agrees to cooperate with Brillian in facilitating
Brillian's control of the nature and quality of: (1) all services and goods
rendered by TFS in connection with the Trademarks; (2) all goods produced,
distributed, or sold by TFS under the Trademarks; and (3) all related
advertising, promotional, and other related uses of the Trademarks by TFS, and
supply Brillian with uses of the Trademarks upon written request by Brillian.
3.3 TFS acknowledges the ownership of the Trademarks by
Brillian and agrees that it will do nothing inconsistent with such ownership,
and that all use of the Trademarks and all goodwill developed therefrom shall
inure to the benefit of and be on behalf of Brillian. TFS agrees that nothing in
this IP Agreement shall give TFS any right, title, or interest in the Trademarks
other than to use the Trademarks in accordance with this IP Agreement.
SECTION 4
PRESERVATION OF RIGHTS IN PATENTS
4.1 In the event that Brillian decides to abandon,
discontinue prosecution, or otherwise decides not to maintain one or more
Patents, Brillian shall notify TFS in writing of such decision within thirty
(30) days, and TFS shall have the right to take appropriate action to avoid
abandonment, continue prosecution, and/or otherwise maintain such Patents at
TFS' sole expense.
4.2 If TFS elects to take such action to avoid
abandonment, continue prosecution, and/or otherwise maintain Patents pursuant to
Section 4.1, Brillian agrees to assign all right, title, and interest in such
Patents to TFS. However, such assignment to TFS from Brillian shall be subject
to a grant by TFS to Brillian of a perpetual, non-exclusive, worldwide,
non-terminable, fully paid, royalty-free, irrevocable, right and license,
without the right to sublicense, under such Patents to make, have made, use,
sell, lease, offer to sell, import, have imported, modify, market, distribute,
or otherwise dispose of a Microdisplay or systems incorporating a Microdisplay.
4.3 Brillian agrees to provide reasonable assistance to
TFS in its efforts to avoid abandonment, continue prosecution, and/or maintain
Patents pursuant to Section 4.1.
SECTION 5
PRESERVATION OF RIGHTS IN TRADEMARKS
5.1 In the event that Brillian decides to abandon,
discontinue prosecution, or otherwise decides not to maintain one or more of the
Trademarks, Brillian shall notify TFS in writing of such decision within thirty
(30) days, and TFS shall have the right to take appropriate action to avoid
abandonment, continue prosecution, and/or maintain such Trademarks at TFS' sole
expense.
5.2 If TFS elects to take such action to avoid
abandonment, continue prosecution, and/or otherwise maintain Trademarks pursuant
to Section 5.1, Brillian agrees to assign all right, title, and interest in such
Trademarks to TFS. However, such assignment to TFS from Brillian shall be
subject to: (1) a grant by TFS to Brillian of a perpetual, non-exclusive,
worldwide, non-terminable, fully paid, royalty-free, irrevocable, right and
license, without the right to sublicense, to use such Trademarks in connection
with the production, distribution, sale, and advertisement of a Microdisplay or
systems incorporating a Microdisplay; and (2) quality control, ownership, and
benefit of trademark obligations as TFS is obligated pursuant to Section 3 of
this IP Agreement.
5.3 Brillian agrees to provide reasonable assistance to
TFS in its efforts to avoid abandonment, continue prosecution, and/or maintain
Trademarks pursuant to Section 5.1.
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SECTION 6
GRANT OF LICENSE BY TFS
6.1 Subject to the terms and conditions contained in this
Agreement, TFS hereby grants to Brillian, and Brillian hereby accepts from TFS,
a non-exclusive, non-transferable, non-sublicensable, worldwide license to use
TFS' Patent Process (as described under Exhibit B to this Agreement) and patent
database management system.
6.2 Notwithstanding anything to the contrary, Brillian's
rights under this Section 6 are limited and Brillian expressly acknowledges and
agrees that nothing herein shall convey to Brillian any further or additional
right, title, or interest in TFS' property. Except as expressly provided in this
Agreement, under no circumstances shall Brillian, as a result of this Agreement
or by implication, estoppel, or otherwise, obtain any ownership interest in or
any other right to any of TFS' property.
SECTION 7
MISCELLANEOUS
7.1 Brillian and TFS each hereby represent and warrant
that: (i) it has the right, power and authority to enter into this IP Agreement
and to fully perform all its obligations hereunder; and (ii) the making of this
IP Agreement does not violate in any material respect any agreement existing
between it and any third party.
7.2 IN NO EVENT SHALL BRILLIAN BE LIABLE TO TFS FOR ANY
INDIRECT, SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES, WHETHER BASED ON BREACH
OF CONTRACT, TORT (INCLUDING NEGLIGENCE), PRODUCT LIABILITY, OR OTHERWISE, AND
WHETHER OR NOT BRILLIAN HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGE AND
IN NO EVENT SHALL TFS BE LIABLE TO BRILLIAN FOR ANY INDIRECT, SPECIAL,
INCIDENTAL OR CONSEQUENTIAL DAMAGES, WHETHER BASED ON BREACH OF CONTRACT, TORT
(INCLUDING NEGLIGENCE), PRODUCT LIABILITY, OR OTHERWISE, AND WHETHER OR NOT TFS
HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGE.
7.3 All rights and licenses granted to TFS under or
pursuant to this IP Agreement are, and shall otherwise be deemed to be, for
purposes of Section 365(n) of the United States Bankruptcy Code, licenses to
rights of "intellectual property" as defined thereunder. Notwithstanding any
provision contained herein to the contrary, if Brillian is under any proceeding
under the Bankruptcy Code and the trustee in bankruptcy of Brillian, or
Brillian, as a debtor in possession, rightfully elects to reject this IP
Agreement, TFS may, pursuant to 11 U.S.C. Section 365(n) (1) and (2), retain any
and all of TFS's rights hereunder, to the maximum extent permitted by law.
7.4 If a Bankruptcy Event occurs, TFS shall forthwith be
entitled to a complete duplicate of intellectual property licensed hereunder or
complete access to, as appropriate, any and all embodiments of such intellectual
property including the source code thereof, and the same, if not already in
TFS's possession, shall be promptly delivered to TFS upon TFS' written request.
Upon (i) any such Bankruptcy Event, unless Brillian elects to continue to
perform all of its obligations under this IP Agreement; or (ii) if not delivered
under (i) above, rejection of this IP Agreement by or on behalf of Brillian, TFS
shall have the sublicensable right to fully exploit in any manner all such
intellectual property and to perform any and all of Brillian's obligations
hereunder.
7.5 In addition to the foregoing, if a Bankruptcy Event
occurs, TFS shall have the right, but not the obligation, to purchase all of
Brillian's right, title, and interest in and to the Transferred
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Intellectual Property and Trademarks at the then fair market value of such
Transferred Intellectual Property and Trademarks as determined by an independent
appraiser agreed upon by Brillian and TFS or other method consistent with
applicable law.
7.6 Brillian may not assign or otherwise transfer its
rights or obligations under this IP Agreement without the prior written consent
of TFS or as otherwise permitted under this Agreement. TFS may not assign or
otherwise transfer its rights or obligations under this IP Agreement without the
prior written consent of Brillian or as otherwise permitted under this IP
Agreement.
7.7 This IP Agreement sets forth the entire agreement and
understanding between Brillian and TFS as to the subject matter of this IP
Agreement and merges all prior discussion between them, and neither Brillian nor
TFS shall be bound by any modification of this IP Agreement, other than as
expressly provided in this IP Agreement or set forth on or subsequent to the
date hereof in writing and signed by a duly authorized representative of
Brillian and TFS to be bound thereby. No oral explanation or oral information by
either Brillian or TFS shall alter the meaning or interpretation of this IP
Agreement.
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IN WITNESS WHEREOF, the parties have executed and delivered
this Intellectual Property Agreement as of the date first written above.
THREE-FIVE SYSTEMS, INC.
By: /s/ Xxxxxxx X. Xxxxxxxx
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Name: Xxxxxxx X. Xxxxxxxx
Title: Executive Vice President and
Chief Financial Officer
BRILLIAN CORPORATION
By: /s/ Xxxxx X. Xxxxx
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Name: Xxxxx X. Xxxxx
Title: Vice President and Chief Financial Officer
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